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Federal rebate set to make electric cars more affordable

Transport Canada is looking at ways to include used vehicles in a federal rebate for electric cars — something observers say is needed to make the program more relevant to low or middle-income consumers, rather than only those able to buy brand new.

Their recommendation comes while a new analysis also shows more than $100 million of the almost $300 million in subsidies issued so far have gone to Tesla drivers.

The program offers buyers an upfront discount of up to either $5,000 or $2,500 and sellers then have to claim the incentives to be reimbursed.

The Liberal government introduced the subsidy in 2019 for those buying or leasing new zero-emission vehicles, including businesses and local governments, as a way to reduce transportation pollution.

From then until early 2021, government agreements show Tesla was reimbursed around $102 million of the roughly $296 million sent to individual dealerships selling electric vehicles from 15 different automakers.

Next to Tesla — which sells directly to customers — Hyundai dealerships saw the second highest reimbursement amount of $50 million, followed by Chevrolet dealerships at nearly $40 million.

Unlike the latter two, which have a selection of electric vehicles that qualify for rebates, Tesla currently only has one, its Model 3.

With a manufacturer’s suggested retail price for a standard range at $44,999, the Tesla Model 3 squeezes in just below the program’s cutoff for a low-end model of $45,000.

The pricing strategy used by automakers, including Tesla, is why a parliamentary committee that studied the use of electric vehicles, recommended last month that the program’s overall price cap be reviewed.

“To date, consumers who have purchased the Tesla Model 3 represent approximately 25 per cent of the total (program) claims,” reads a statement from Transport Canada, provided by spokesperson Cybelle Morin.

The department said providing consumers with vehicle options is important “to increasing the adoption of zero-emission vehicles in Canada.”

Canada has a sales target to have 10 per cent of all light-duty cars be electric by 2025.

“It’s going to become a real affordability issue in terms of whether the government wants to spend that much money on helping people get to those targets by 2025,” said David Adams, president of the Global Automakers of Canada.

He said incentives should remain available for at least the next few years until the price gap closes between electric vehicles and ones powered by traditional internal-combustion engines.

Transport Canada is exploring options for expanding incentives to include used zero-emission vehicles, which would broaden access to such vehicles for more Canadians, the department said in a statement.

Last fall, Ottawa announced it was pumping another $287 million into the $300 million program because its popularity meant the cash was drying up sooner than the end date of 2022.